The markets are pricing in the expectation of a second rate cut for 2015, as the overall feeling of the RBA (Reserve Bank of Australia) is that the Aussie Dollar is still too strong. The RBA have a target rate against the US Dollar of 0.75 and despite the first cut of the year, that rate has still not been realised. We have also seen financial markets move very erratically for Australia’s key export Iron Ore. With the uncertainty of the Iron Ore value on stock markets, the safest course of action decided on by Governor Glen Stevens seems to be make the commodity attractive by making it cheap to buy – the long term gain being re-investment from overseas in the industry.
Anyone buying or selling AUD with GBP involved should be incredibly conscious of the Sterling side of the transaction. The impending UK General Election (in just 36 days) looks set to move the Pound. During the build up to the previous General Election the Pound moved a total of 7 cents against major currencies so worth concluding a transaction prior.
With the AUD tipped to slip, I’d be inclined to SELL AUD prior to Easter. I’d be looking to BUY AUD at the beginning of next week should the RBA cut rates. If the RBA do cut rates then I wouldn’t hang around as the longer it’s left the closer you are to the UK Election!
If you have an exchange requirement, please feel free to get in touch. Please either call me (Andrew Bromley) on the direct line to the trading floor ( 01494 787 478 ) or alternatively email me directly AJB@currencies.co.uk
P.S – Aussie and Kiwi Dollars may soon be combined as again there is speculation about a cross-Tasman alliance! Its tipped to be called the ANZAC Dollar (Australia and New Zealand Amalgamated Currency) – watch this space!